In The News: Raising the Bar for Loan Forgiveness

September 16, 2019

By Andrew Kreighbaum, Inside Higher ED

In her first significant act as Education Secretary more than two years ago, Betsy DeVos said she planned to overhaul an Obama administration student loan rule designed to protect borrowers defrauded by their college.

Despite her efforts, the Obama borrower-defense regulations took effect last year. But on Friday DeVos capped off a two-year effort by issuing her own rule, which scales back loan forgiveness opportunities for student borrowers.

The new regulations significantly raise the bar for student borrowers seeking debt forgiveness based on claims they were defrauded by their colleges. They add a new three-year time limit for those borrowers to file claims, and each case will be considered individually, even if there is evidence of widespread misconduct at an institution.

Borrowers will also be asked to demonstrate they suffered financial harm from their college’s misconduct and that the college made deceptive statements with “knowledge of its false, misleading, or deceptive nature.”

The collapse of the Corinthian Colleges chain and subsequent flood of debt-relief claims prompted Education Department officials under the last administration to issue the 2016 borrower-defense rule.

Although the rule was a response to misconduct in the for-profit college sector, it applied to all Title IV institutions. And private nonprofit college groups had expressed concerns that their institutions could be on the hook for student claims even for unintentional mistakes in marketing materials. DeVos had made clear previously that she thought the regulations were too permissive, essentially offering borrowers the chance at “free money.”

“We believe this final rule corrects the wrongs of the 2016 rule through common sense and carefully crafted reforms that hold colleges and universities accountable and treat students and taxpayers fairly,” she said in a statement accompanying the rule.

Education Department officials said the new three-year time limit for claims aligns with record-retention requirements for colleges. They said the process will give institutions the opportunity to respond to claims and students the chance to elaborate on claims based on those responses.

The DeVos regulations will save the federal government about $11 billion over 10 years, the department estimates (the federal government shoulders the cost of loan discharge if it cannot recoup funds from the institutions themselves). Consumer advocates argue those savings are created by rigging the system against borrowers.

To Read More, Click Link Below:

https://www.insidehighered.com/news/2019/09/03/devos-imposes-tougher-debt-relief-standards-student-borrowers-alleging-fraud

 

In The News: Families, Not Just Students, Feel The Weight Of The Student Loan Crisis

September 4, 2019

By Elissa Nadworny, NPR

Middle-income family in debt.

For many college students settling into their dorms this month, the path to campus — and paying for college — started long ago. And it likely involved their families.

The pressure to send kids to college, coupled with the realities of tuition, has fundamentally changed the experience of being middle class in America, says Caitlin Zaloom, an anthropologist and associate professor at New York University. It’s changed the way that middle class parents raise their children, she adds, and shaped family dynamics along the way.

Zaloom interviewed dozens of families taking out student loans for her new book, Indebted: How Families Make College Work at Any Cost. She defines those families as middle class because they make too much to qualify for federal aid — but too little to pay the full cost of a degree at most colleges. For many, the burden of student debt raises big questions about what a degree is for.

This conversation has been edited for length and clarity.

How would you describe the world of student debt?

Families have really been transformed by debt, and really by the problem of dreaming about sending a kid to college and trying very hard to pay for it — oftentimes from the very earliest moments of a child’s life. I think what we don’t take account of, nearly enough, is what that experience is like — [what] the experience of trying to give a kid a shot by sending them [to] college means for most middle class families.That’s the thing that I think that we need to be focusing on.

You argue in the book that the idea of going to college is pervasive in American life.

It is pervasive. That message is coming at families from every direction: that being a success in America depends upon the ability to get into college, to get an education and to graduate. But that itself depends on the ability to pay, which thrusts us right into the paradox of it all — which is that on the one hand, young adults and the parents who support them have this very clear goal about getting a college education. On the other hand, that is going to cost them dearly.

Click On Link Below To Read More

https://www.npr.org/2019/09/04/755221033/families-not-just-students-feel-the-weight-of-the-student-loan-crisis

In The News: Americans are staying silent on student loan debt—and it’s not helping

August 19, 2019

By Megan Leonhardt, CNBC

When it comes to uncomfortable conversations, Americans would rather talk about pretty much anything else — politics, health issues, religion — than discuss their finances.

Yet the money topic Americans voted as most thorny is one that’s constantly in the news: student loans. Over a third of Americans say they see student loan debt as the biggest financial taboo, according to a Harris Poll of over 1,000 U.S. adults commissioned by TD Ameritrade.

A similar survey conducted by the MIT AgeLab and sponsored by TIAA found that 40% of respondents reported they never talk to their family about their student loans. In fact, over half said their families know “nothing” or “very little” about their debt.

Yet you’re far from unique if you’re swimming in student loan debt. Americans have amassed $1.5 trillion in student loan debt, with one in four Americans carrying a balance. And both the prevalence and the effect of student loans is widely studied: the Fed found that 20% of the homeownership decline among millennials (ages 24 to 32) can be attributed to this debt. Other surveys have found that student loan debt is forcing millennials to put off other major life milestones, such as getting married and starting families.

Democratic 2020 presidential candidates are even making student loan debt solutions a core component of their campaigns — promising everything from better refinancing options to introducing more debt forgiveness programs to wiping it out completely.

So why aren’t people talking about their student loans around the dinner table or with friends over drinks? It’s personal, experts say. “Student loan debt may be pervasive and a constant topic in the media and in the political arena, but it’s still debt,” Erin Lowry, author of Broke Millennial Takes On Investing, tells CNBC Make It. “People are fundamentally uncomfortable talking about debt because it’s easy to assume another person is going to pass judgement on your choices.”

And boy do they.

Click On Link Below To Read More:

https://www.cnbc.com/2019/08/07/student-loans-are-the-most-uncomfortable-conversation-topic-for-americans.html

 

In The News: Teacher To Betsy DeVos: ‘Why Didn’t You Forgive My Student Loans?’

August 5, 2019

By Zack Friedman, Forbes

Secretary of Education Betsy DeVos

An educator thought she was on track to receive student loan forgiveness.

She made the payments. She thought she did everything right.

Then, she was told years later that she didn’t qualify.

Here’s what you need to know – and how you can avoid her fate.

New Lawsuit: Student Loan Forgiveness

As first reported by NPR, Debbie Baker, a Director Education at a non-profit organization in Tulsa, Oklahoma, expected that her $76,000 of student loan debt would be forgiven through the Public Service Loan Forgiveness program, a federal program through the U.S. Department of Education that forgives federal student loans for individuals who work in public service.

According to Baker, her student loan servicer – the company responsible for collecting and managing her student loan payments –  allegedly told her for nine years that she met all the requirements to receive public service loan forgiveness. As such, Baker thought she would have all her federal student loan forgiven after meeting the program’s requirements, which she believed she met. However, after making her usual monthly payments under an income-driven repayment program, the U.S. Department of Education said she did not qualify for student loan forgiveness. You can imagine Baker’s reaction.

Now, Baker is a plaintiff in a new lawsuit filed by the American Federation of Teachers, one of the nation’s largest teacher’s unions, against the U.S. Department of Education, which is led by Secretary Betsy DeVos. The lawsuit alleges, among other things, that:

  • the Public Service Loan Forgiveness program is “grossly mismanaged” and
  • the program, as it’s currently administered, violates the Due Process Clause of the Fifth Amendment to the U.S. Constitution
  • the U.S. Department of Education is aware that student loan servicers make misrepresentations to borrowers, which results in borrowers getting rejected for student loan forgiveness and suffering financial and other harm.

Was Baker given the wrong information from her student loan servicer? Was it Baker’s responsibility to understand all the requirements of the program? Is the program administered properly? What is the proper role of student loan servicers – advisors or student loan payment collectors? Many of these issues may be addressed as a result of this lawsuit.

To Read More, Click Link Below:

https://www.forbes.com/sites/zackfriedman/2019/07/15/punlic-service-loan-forgiveness-lawsuit/#217b029c32ab

In The News: ‘I’m Drowning’: Those Hit Hardest By Student Loan Debt Never Finished College

August 1, 2019

By Elissa Nadworny, NPR

Most days, 25-year-old Chavonne can push her student loan debt to the back of her mind.

Between short-term office jobs in the Washington, D.C., area, she drives for Uber. But once in awhile, a debt collector will get hold of her cellphone number — the one she keeps changing to avoid them — and it all comes back fresh. “I’ll be like, ‘Oh no!’ ” she says. “It’s a sad reminder that I owe somebody money!”

In April, she got another reminder when the government seized her tax refund.

All this for a degree she never finished.

Back in high school, she recalls, her teachers and friends pushed her to go to college. And so, without too much thought, Chavonne enrolled at the University of Mississippi and borrowed about $20,000 to pay for it.

Far away from home and in a challenging environment, she struggled — and after three semesters, she’d had enough. Her college days are five years behind her, but the debt she took on is not.

Today, rent, car payments, gas and food are higher up on her list of priorities. And so she’s in default, not paying on her loans.

The one thing that could help Chavonne earn more money, of course, is earning a degree. But because she’s in default, she doesn’t have access to federal student aid that could help her go back and finish. It’s a vicious cycle for Chavonne and millions of other students who leave college with debt and without a degree.

From mid-2014 to mid-2016, 3.9 million undergraduates with federal student loan debt dropped out, according to an analysis of federal data by The Hechinger Report, a nonprofit news organization.

The default rate among borrowers who didn’t complete their degree is three times as high as the rate for borrowers who did earn a diploma. When these students stop taking classes, they don’t get the wage bump that graduates get that could help them pay back their loans.

The perception is, work hard and pay what you owe, says Tiffany Jones, who leads higher education policy at the Education Trust, “but it’s not manageable even if you’re working.”

To Read More Click Link Below:

https://www.npr.org/2019/07/18/739451168/i-m-drowning-those-hit-hardest-by-student-loan-debt-never-finished-college

In The News: Feds find potential fraud in student loan repayment plans

July 26, 2019

By Collin Binkley, ABC News

Tens of thousands of federal student loan borrowers may be getting their monthly payments lowered by lying about their income and family size, yet the U.S. Education Department is doing little to catch them, according to a report released Thursday by a federal watchdog agency.

Among the most extreme cases reported by the Government Accountability Office are two separate borrowers who claimed to have 93 relatives in their households, along with 3,300 cases in which borrowers said they had no income even though federal data suggest they made $100,000 a year or more. All were approved for lower loan payments.

Investigators were reviewing the Education Department’s oversight of its popular income-driven repayment plans, which allow borrowers to pay lower monthly rates based on their incomes and family sizes. After 25 years of payments, all remaining debt is wiped clean.

Education Secretary Betsy DeVos said her agency will conduct comprehensive review of the repayment plans and will refer cases of fraud to the Justice Department for prosecution. She placed blame on previous administrations, saying the problems are proof that “many of the policy ideas previously pursued were poorly implemented.”

“Misrepresenting income or family size is wrong, and we must have a system in place to ensure that dishonest people do not get away with it,” DeVos said. “We didn’t create that problem, but rest assured we will fix it.”

The federal watchdog agency says it identified 95,100 cases in which borrowers were approved as having no income even though it appears they were earning money. Using wage data from the Department of Health and Human Services, investigators found that borrowers in a third of those cases may actually have been making $45,000 a year or more, including some who topped $100,000.

They concluded that the department “does not have procedures to verify borrower reports of zero income, nor, for the most part, procedures to verify borrower reports of family size.” Borrowers applying for the repayment plans can check a box indicating they have no income, and the department generally takes them at their word with no further documentation needed, the investigation found.

If approved, borrowers with no income typically are not required to make monthly payments.

Click Link Below to Read More:

https://abcnews.go.com/Politics/wireStory/feds-find-potential-fraud-student-loan-repayment-plans-64575667

In The News: More student loan borrowers carry six-figure balances

July 23, 2019

By Annie Nova

ONE TIME USE H/O: Elisha Bokman

Elisha Bokman has been out of school for eight years. Still, her student loan balance is half a million dollars.

Today, for her doctorate degree in naturopathic medicine and master’s in acupuncture from Bastyr University, she owes $499,322.69.

She and her husband struggled to buy a house because of her debt. Eventually, the financial stress led them to a divorce. “He felt like he couldn’t live his life or do the things he wanted to do,” Bokman, 38, said. She wanted to open her own medical practice, but she said her student debt prevents her from getting a business loan.

“It really effects the remainder of your life,” Bokman said. “There’s no out.”

Around 178,000 graduate students owed more than $100,000 in the 2015-2016 academic year, up from 51,000 in 2003-2004, according to Mark Kantrowitz, the publisher of SavingForCollege.com. In the first quarter of 2019, over 6% of all student loan borrowers owed more than $100,000, up from 5.4% in 2017.

Recently, Democratic presidential candidates Elizabeth Warren and Bernie Sanders have proposed forgiving student debt. Warren’s plan would reduce people’s tabs by up to $50,000, whereas Sanders’ would erase it all.

To Read More, Click Link Below:

https://www.cnbc.com/2019/07/12/she-owes-500000-in-student-loans-giant-balances-are-on-the-rise.html

In The News: Debt free at 23: How this woman paid off $20K in loans in just one year

July 18, 2019

By Sofia Pitt

For CNBC

Paying with paper instead of plastic helped Kristy Epperson eliminate $20,000 in student loan and car loan debt in just one year.

After earning her bachelor’s degree in nursing from Wright State University in 2017, Epperson owed about $16,000 in student loans from multiple borrowers with interest rates of between 3.6% and 6.8%. She also had roughly $4,000 left on her car loan, at an interest rate of 4.2%.

Even as Epperson began slowly chipping away at that debt, she managed to achieve another financial goal: homeownership. She was able to buy a place in Dayton, Ohio, with only 5% as a down payment. Becoming a homeowner forced her to take a hard look at her expenses and reevaluate her spending habits — which made her more determined to wipe out her student loan and auto debts.

“If something happened, if I lost my job, I’d have no way to pay my bills,” Epperson tells Grow. “I needed a better long-term plan.”

In addition to getting a second job as a substitute teacher, which brought in an extra $100 to $300 a month, Epperson created an expense spreadsheet and began tracking her purchases to help her pay down debt faster. She used her Instagram page, @DebtFreeAtTwentyThree, to share her setbacks, strategies, and accomplishments.

To Read More, Click on Link Below:
https://www.usatoday.com/story/money/2019/07/17/student-loans-car-loans-woman-paid-off-debt-cash-budget/1754028001/

In The News: Making the FAFSA Mandatory

July 15, 2019

By Andrew Kreighbaum
For Inside Higher Ed

In a bid to boost the number of students receiving financial support for college, Texas will soon become the second state to require high school seniors to complete the Free Application for Federal Student Aid before graduating.
A handful of states have looked at making FAFSA completion mandatory for graduating high school students. Beginning with the 2020-21 academic year, Texas will provide a serious test case for the policy after big successes in Louisiana, which enacted the requirement last year.

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Completing the form is a leading indicator of college enrollment. And there’s ample evidence that more financial aid is associated with outcomes like college completion. Actually achieving big gains in FAFSA completion, though, requires significant investment and outreach by schools and state officials.
During the past academic year, Louisiana saw FAFSA completions by high school students climb by more than 25 percent. College access groups say high school seniors leave millions of aid dollars on the table each year by not completing the form — often because it’s too difficult or they don’t believe they’ll qualify for aid.
“As the forerunner of this kind of policy, the early successes that Louisiana has seen with mandatory FAFSA has to be encouraging for other states,” said Bill DeBaun, director of data and evaluation at the National College Access Network. “We shouldn’t assume Texas will see the same effects Louisiana did. But given the scale of the state, even a modest effect could make a big splash on the FAFSA completion cycle.”
If Texas has 25 percent of the growth Louisiana saw in FAFSA completions, that would mean an additional 12,700 students submit the application, DeBaun said.

To Read More, Click On Link Below:
http://www.insidehighered.com/news/2019/07/10/texas-becomes-second-state-require-fafsa-completion

Why You Should Pay Off Your Student Loans Early

Hello and thank you for stopping by to support No Debt But Love! This site represents a movement to live out Romans 13:8 as we leave no debt outstanding, but the continuing debt to love one another. This means we will pay off all our debts: student loans, home mortgages, car loans, and credit cards.

My personal struggle has been student loans as I have been on this repayment journey for 8 years. I would like to recognize a supporter of No Debt But Love. She is a fellow YouTuber and blogger. Her name is Mary, and her YouTube channel is called “A Merry Life, On A Budget”. Check out the links to her channel and her blog below.
YouTube Channel:
https://www.youtube.com/user/amerrylife
Blog:
https://amerylife.com

This blog entry will feature a friendly critique of an article I came across titled, “Why You Might Not Want to Pay Off Your Student Loans Early” published by the Motley Fool. Here’s the link below. have also featured this article in a previous post.
https://www.fool.com/personal-finance/2019/06/29/why-you-might-not-want-to-pay-off-your-student-loa.aspx

The first reason the article gives for not paying off loans early is due to borrower protection and the possibility of getting debt forgiven after 10 years of public service.
However, 99% of applicants for student loan forgiveness are denied. This prospect doesn’t sound promising. Here’s support of my perspective provided by Forbes below.
https://www.forbes.com/sites/zackfriedman/2019/05/01/99-of-borrowers-rejected-again-for-student-loan-fworgiveness/#173bad7db16b

The 2nd reason…The interest rates on your student loans may be lower than other debt. In my frame of reasoning, debt is the amount you owe to someone else. If any debt you have accrues interest, this means compound interest is working against you and not for you. Lord forbid you experience a layoff, resulting you to defer payments.

The 3rd Reason…You could potentially earn a better return on your money by investing it. Whenever you invest there is risk associated with financial instruments we choose to purchase. Usually, the greater the rate of return, the greater the risk you subject yourself to. It would be wise to consider the opportunity costs should you choose to invest as opposed to not investing.

The fourth and final reason…You’ll be giving up a tax deduction (if you qualify.) To this I would say, why hold on to debt to get a tax deduction? If you are a high-income earner and or owe a substantial amount of debt, the $2,500 would either phase out or wouldn’t make much of a difference. Wouldn’t it be better to have your student loan debt paid off and not have interest payments to make?

This concludes this blog post. What do you think? Should you pay off student loan debt early or on the 10-year standard repayment plan? As for me, I hope to have my student loan debt paid around this time next year, concluding 9 years of torture lol. video… Well until next time everyone… Stay Strong… Fight On… and have No Debt But Love, Peace and Blessings.

A YouTube video corresponding to this blog post is in the works! Stay tuned!